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Lecture notes supply chain strategy + summary of the articles
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Lecture notes supply chain strategy + summary of the articles
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Lecture 1 – IntroductionExam: minimum grade 5.0, on Test vision, 60% of your final grade, multiple choice and open
questions, questions based on the 16 articles.
Assignment: report (70%) (2500 words) and presentation (30%) (6 slides), 6 students per
team, 40% of total grade. Report (70%): Q1: overview of the supply chain (graphical
representation), Q2: quality protocols, Q3: major disruptions, Q4: link to the articles (can
also be done all the way through the report). Tutorials are reserved slots for the
presentation.
Article 1: “A decade from now, when we again look back, we will see that supply-chain
management in its first 10 years shifted business focus and, in doing so, set up the
opportunity for the second 10 years, the opportunity to dramatically redefine the
competitive landscape”
- 30 years ago: boom in cross-business coordination based on supply-chain-
management concepts
- The field has broadened and shifted over time
- How is supply-chain management applied in each context?
- How is it changing the way managers think about their business?
Examples connected to the article:
Shift No. 1.
Shift No. 2. Zara uses a small stock and TikTok to promote their products, they increase the
stock if demand increases
Shift No. 3. FMI, federal management inventory, if you have a third-party supplier, they can
see the demand of the customer immediately instead of waiting. Block chain technology,
you can see what everyone is doing in the supply chain if everyone shares information.
Shift No. 4. Ben and Jerry’s reduce costs by transporting the product at higher temperatures.
AI document processing, making warehouse more optimal (Amazon). Shrinkflation:
companies make their products smaller and increase the price.
Shift No. 5. Self-checkouts in supermarkets. Package station: you can send your package to
one point; this will reduce the distribution costs.
Shift No. 6. Bridal store: old way dresses are bought and altered in the store itself. New way
they tailor the dress in the factory already instead of the store. Nike: you can personalize
your shoes instead of the mass market supplies in the store.
Article 2: “Learning to evolve: A review of contemporary lean thinking”
History: Taiichi Ohno was the owner of Toyota. From 1980-1990 the focus was on awareness,
by dissemination of shop-floor practices. Later on, the focus has shifted to the quality of the
products in around mid 1990. In this period the key business process was manufacturing and
materials management. From mid 1990 to 2000 the focus was mainly on quality, cost, and
delivery. The key business process was order fulfillment.
Single factory value stream concept supply chain
Lean thinking: reducing costs of the product/service or increasing the internal perceived
value of the product/service by the consumer.
,1) Value is created if internal waste is reducing, as the wasteful activities and the associated
costs are reduced, increasing the overall value. 2) Value is also increased, if additional
features or services are offered, which are valued by the customer.
Criticism on lean thinking:
o Lack of contingency and ability to cope with variability. There is more pressure on the
employees because there is no room for any inconveniences.
o Lack of consideration of human aspects.
o Scope and lack of strategic perspective: operational focus on shop-floor.
The main approach of lean is to add value to a product/service.
Stages of lean
1. Cells and assembly lines: highly prescriptive application of tool and methods.
2. Shop-floor: core values of management practices.
3. Value stream: awareness that individual streams should be individually mapped, and
contingent solutions found for their improvement.
4. Value systems: active use of contingent strategy. Takes into account aspects such as
size, industrial sector, industrial dynamics and technology employed.
Lean framework: From a strategic point of view: you can integrate other approaches without
contradicting toe core objective of lean to provide customer value. Any concept that
provides customer value can be
in line with a lean strategy, even
if lean production tools on the
shop-floor, such as Kanban, level
scheduling or takt time are not
used.
,Main conclusions about lean:
- Lean exists at two levels: strategic and operational. The customer-centered strategic
thinking applies everywhere, the shop-floor tools do not. This has led to
misunderstandings as to where to apply lean.
- Lean has evolved a lot, which is often not acknowledged in the criticism. Lean has
evolved on the basis of its five principles: X
- Organizations that miss the strategic aspect (value creation and understanding
customer value) and assume that quality, cost, and delivery equal customer value,
only address the cost axis. This has led to point optimization in the supply chain.
The article begins by discussing the origin of lean thinking, tracing it back to the Toyota
Production System (TPS) in the 1950s. It explains how TPS emphasized waste reduction,
continuous improvement, and respect for people. These principles formed the foundation of
lean thinking and have since been applied in various industries beyond manufacturing. The
author then introduces the concept of the "learning organization" and emphasizes its
relevance to lean thinking. Learning organizations actively encourage and support the
development of knowledge and skills among their employees, fostering a culture of
continuous improvement. This organizational mindset is crucial for successfully
implementing lean practices and adapting to changing circumstances. Next, the article
explores different contemporary approaches to lean thinking. It highlights the importance of
aligning lean efforts with the overall strategy of the organization and integrating it into
everyday operations. The author emphasizes the need to focus on both the technical and
social aspects of lean implementation, as it requires changes in both processes and people's
behaviors.
The article also discusses the role of leadership in shaping a lean organization. Leaders play a
vital role in creating a shared vision, establishing clear goals, and providing the necessary
resources for lean initiatives. They are responsible for instilling a continuous improvement
mindset and fostering a culture that values experimentation, feedback, and learning.
Furthermore, the author addresses common challenges and barriers to successful lean
implementation. These include resistance to change, lack of resources, and insufficient
training and education. The article offers insights and strategies to address these obstacles,
such as creating a supportive environment for experimentation and learning, investing in
employee development, and establishing effective communication channels. Finally, the
article concludes by stressing the need for a holistic approach to lean thinking. It encourages
organizations to embrace a culture of continuous learning and improvement, encouraging
employees at all levels to actively contribute to lean initiatives. By continuously evolving and
, adapting, organizations can unlock the full potential of lean thinking, leading to improved
efficiency, better customer satisfaction, and increased competitive advantage.
In summary, the article provides a comprehensive review of contemporary lean thinking,
emphasizing the importance of continuous learning, adaptation, and a holistic approach. It
discusses the origins of lean thinking, the concept of the learning organization, various
approaches to lean implementation, the role of leadership, common challenges, and the
benefits of embracing a culture of continuous improvement. Overall, the article serves as a
valuable resource for organizations seeking to enhance their understanding and
implementation of lean principles across different industries
Lecture 3 – September 4th
Hazards of exchange: Information asymmetry, opportunism (you’re dealing with someone
who can possibly cheat on you), bounded rationality (limits on search), incentives (high
powered/low powered; efforts will not lead to a pay off in low powered governances), asset
specific investments, fundamental transformation (you are loyal to one supplier), chance
(calculative), metric problems (how do you rate a date? Is it subjective or objective),
safeguards (protecting yourself by a contract).
- Chances of being cheated: taxi drivers, accommodation, by your date, etc.
- Other issues: bad location of your accommodation, bad restaurant, flight
delays/cancellations
- Steps to protect yourself: extensive research, time spent online with the person,
google/backup plans?
Transaction cost economics (TCE): a comparative assessment of the economic efficiency of
alternative governance modes. Make or Buy decisions.
- Markets: exchanges are governed by prices in supply-demand equilibrium.
- Hierarchy: transactions occur under a unified owner, who settles disputes by
administrative fiat.
- Hybrid: long-term contracts that preserve autonomy but provide more transaction-
specific safeguards as compared with the market.
Behavioral assumptions: bounded rationality: limits of processing and attention,
Opportunism: self-interest with guile.
Trust is a great predictor of wealth of a country. A country with high levels of trust is wealthy
most of the time because trust makes transactions efficient.
Attributes of a transaction:
- Asset specificity: investments made specifically for a transaction such that the next
best use leads to less of productive value. Transaction specific investments can lead
to vulnerability.
- Uncertainty: behavioral and environmental uncertainty.
- Frequency
Cost of contracting: Degree of completeness: more complete contracts are more expensive
to draft. However, it is not possible to plan everything/foresee everything. Fundamental
transformation. Safeguards: you have to include it in the contract to get rid of the risk of
being cheated on, but including everything in a contract is expensive.
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